Wednesday, September 08, 2010

Social capitalism

WE DON'T TAKE that many magazines here; perhaps the only one I read more or less consistently is The Nation. Lindsey's father subscribed to it for years, after he gave up on The New Republic which had been his favorite into the 1960s. So we subscribe to it too, partly to keep his commitment to it alive. (I owe him so much, including the little political interest and liberal sentiment I have.)

I read The Nation irregularly, though, tending to catch up on a number of issues at a time (taking "a time" flexibly, of course). Just now I'm working my way through last May, when the newsmagazine continued to arrive weekly while we continued to move through Sicily weakly. And most recently I've found Steven Hill's fine article "Europe's Answer to Wall Street," published in the May 10 issue and republished online here.

Hill writes about "co-determination," briefly the involvment (not merely representation) of workers in the direction of the (necessarily capitalist) corporations for which they work. "In Germany," he writes,
fully half of the boards of directors of the largest corporations--Siemens, BMW, Daimler, Deutsche Telekom and others--are elected by workers. In Sweden, one-third of a company's directors are worker-elected. To understand the significance of this, imagine if Wal-Mart were legally required to allow its workers to elect a third to half of its board, who would then oversee the CEO. Imagine how much that would change Wal-Mart's behavior toward its workers and supply chain.
Americans are generally speaking parochial creatures, unaware of the currents of political and social beyond their borders. They — we — tend to think of Europe as broke and mired in the past, when in fact
Europe has the largest economy in the world, producing nearly a third of the world's GDP. Indeed, its economy is almost as large as those of the United States and China combined. Europe has more Fortune 500 companies than the United States and China together, and Europe had a higher per capita growth rate from 1998 to 2008 than the United States. Long denigrated by US pundits as the land of high unemployment, the EU currently even has a slightly lower unemployment rate than the United States.

Hill describes the irony of the American influence on the development of co-determination in Europe:
The Allied powers encouraged this line of thinking, since it decentralized economic power, shifting it away from the German industrialists who had supported the Nazi war effort. In effect, US planners "punished" postwar Germany with economic democracy as a way of handicapping concentrated wealth and power, helping to birth the most democratic corporate governance structure the world had ever seen.
A major result of co-determination, of course, is its contribution to the well-being of workers, and thereby to the quality of daily life in society in general.
[T]he World Economic Forum in 2008-09 ranked Denmark, Sweden, Finland, Germany and the Netherlands--all of which employ some degree of co-determination--among the top ten most competitive economies in the world. They are also ranked at or near the top of most lists for quality of life, healthcare and social benefits. That's not a coincidence, since co-determination allows for both economic vibrancy and more egalitarian social policy. And while the United States also ranks high in competitiveness, it is near the bottom among most-developed countries in healthcare, social benefits and quality of life.
Hill's argument has perhaps been veiled by two distractions in recent American media coverage of the European economy: the Euro crisis brought on by social-welfare bubbles in Greece (and, potentially, other Mediterranean nations); and the strikes and protests now going on in re. the proposed delays of retirement.

That last issue is an interesting one: in a period of considerable unemployment, early retirement, like shorter work hours, seems a logical social policy. It's too bad there seems no way of encouraging mass media in our country to present these discussions clearly (and prominently!) to their audiences.


Curtis Faville said...


My theory--which is not original--is that social welfare and unionization were on the ascendancy for about 30 years after WWII. But the tide began to change--as early as the 1950's (and McCarthyism), gaining traction during the Reagan years, and flowering under Bush II. Fueled by corporate greed and general selfishness (and ignorance), capital was able to beat back the gains of the 1930's and 1940's and 1960's, and now we find ourselves on the verge of a second great depression, brought on by banking and investment malfeasance.

Europe has been the crucible for enlightened social pograms since the 1950's. Workers in France and Germany and Great Britain get more vacation time, better working conditions, better schools, better health care, than we do in the U.S. Meanwhile, we've been slogging on alone (long after the collapse of the Soviet Union) with a quasi-war economy ever since the War. That's expensive. Now we've even thrown half a trillion dollars at corporate and financial institutions as "bail-out."

How about bailing out the American middle class? We've given up well over 60% of all our manufacturing jobs in the last 40 years. Those were the backbone of our prosperity, our tax base, our industrial might. It's gone. And you hear people saying everyone needs a master's degree to meet the needs of the new sophisticated technical infrastructure that's coming. Nonsense! We need the manufacturing jobs that middle and lower middle class people can do. Those jobs--which have been shifted to the "Third World"--are the key drivers of any successful capitalist economy. Why do hamburger-flippers need master's degrees?

Charles Shere said...

Much of what you write seems persuasive to me, but what items do you ask more Americans to manufacture? I think one of the reasons for the collapse of the American economy was the very dependence on the sale of manufactured items. After a certain point, any reasonable person has just about everything he needs. Then advertising becomes a significant driver of the economy. When even it can no longer succeed, the idea of planned obsolescence takes over.

The present economic crisis, certainly to the extent that it derives from unemployment caused by lost manufacturing jobs, has to do with the crisis of sustainability. We can no longer depend on constant growth -- in consumer demand, manufacturing, sales -- because of the constant decline of resources, including human resources. We have to find a way of making fewer
things, working fewer hours, wanting less.

Curtis Faville said...

Population control is where it all starts. Whether that will come as a consequence of deliberate moderation, or catastrophic natural curbs to increase, I can't predict. But it will come.

China's current prosperity was the result of a carefully strategized seizure of the industrial initiative from America. And America simply stood by and watched it happen. There was no reason why Americans needed to buy Chinese goods instead of American ones. In the short run, they're "cheaper" but in the long run we all pay many times over for the illusion of cheap goods made abroad. Our manufacturing economy didn't spontaneously "collapse"--it was sold, given away.

A Toyota may seem a cheap alternative to a Ford, but the hidden cost of the Toyota on America means that the Toyota actually costs (us) twice as much as the Ford, once the balance of payments, lost jobs, taxes and capital are factored in. If we had a tariff that actually took that cost into consideration, those Toyotas wouldn't look half so attractive. "Free trade"--nonsense!

Shweta Patidar said...

he essence of social capitalism is that private markets are the most effective allocation mechanism, and output is maximized through sound state macroeconomic management of the economy.
social capitalism